NCERT Solutions for Class 10 Social Science History Chapter 1
Social Science Class 10 Economics
Development 1
Important NCERT Questions Based on new NCERT Books for Session 2022-2023
Questions No: 4
What is the main criterion used by the World Bank in classifying different countries? What are the limitations of this criterion, if any?
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The main criterion used by the World Bank in classifying different countries Per Capita Income. The limitations of this criterion are mentioned below:
• Per capita income can be a useful tool for comparison but it is not accurate enough to show the distribution of income.
• It also doesn’t account for various other factors such as infant mortality rate, literacy level, healthcare, etc.
• Since the population is large, per capita income does not reveal true numbers as the population which does not earn at all like children and the senior citizens are also included while calculating per capita income. National income rises but its distribution makes the rich richer and the poor poorer.
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(a) (i) In world development report, 2006 the World Bank has used the criterion of average income or per capita income in classifying different countries.
(ii) The average income or the per capita income is the total income of the country divided by its population.
(b)According to the WRD 2006, countries are classified as mentioned below.
(i)Rich countries excluding countries of Middle East and certain other small countries are generally called developed countries.
(ii) India comes in the category of low income countries because its per capita income in 2004 was just Rs 2800 per annum.
(iii) Low income countries: Countries with per capita income of Rs 3700 or less are called low income countries.
(iv) Rich countries: Countries with per capita income of Rs 4,53,000 per annum and above in 2004 are called countries.
(c) Limitations of the critierion are mentioned as below:
(i) It does not tell us how this income is distributed among people. A country may have more equitable distribution. People may be neither very rich nor extremely poor.
(ii) In another country with same average income, one person may be extremely rich while others may be very poor. So the method of average income does not give correct picture of a country.
(iii) This system hides disparities among people.
The World Bank uses Gross National Income (GNI) per capita as the primary criterion to classify countries into income groups: low, middle, and high. However, this criterion overlooks income distribution, excludes non-monetary indicators like healthcare and education access, disregards differences in the cost of living, and fails to encompass broader aspects of development. Additionally, it’s influenced by fluctuations in exchange rates, impacting a country’s classification despite potential inaccuracies in economic realities.